Colombia central bank looks set to raise lending rate to 7.5 pct

BOGOTA, June 22 (Reuters) - Colombia's central bank will
likely raise its benchmark interest rate to 7.50 percent on
Wednesday, in what could be the final increase in a 10-month
tightening cycle meant to combat high inflation as policymakers
disagree on further hikes.

The seven-member board is expected to vote for a rate
increase of 25 basis points to its highest level in seven years,
according to 18 of 20 analysts polled by Reuters last week. The
two other analysts said the board would hold borrowing costs
steady.

Should the survey prove correct, it would mark the tenth
consecutive month the central bank has increased the rate,
accumulating 300 basis points in raises.

Analysts said a majority of the board would vote in favor of
an increase in a bid to anchor still-high inflation expectations
and price pressures as economic growth slows down.

"I think in the end that argument will win this month's
meeting," said Camilo Perez, chief economist at Banco de Bogota.

Inflation will reach 6.20 percent this year, analysts said
in the survey, up from the 5.95 percent predicted in last
month's poll.

Depreciation of the peso currency, which has fallen 17.6
percent in the last 12 months against the dollar, has also put
pressure on prices.

Still, policymakers worried about recent economic figures
may vote to hold the rate, analysts said, contrasting with board
members who want to increase borrowing costs by 25 or even 50
basis points.
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